South Africa’s minimum wages outperform those of BRICS partners

Despite 84.5% of South African workers receiving a regular wage or salary – which is high in world terms and even better than some developed countries – the subject of minimum wages remains one of the most heatedly discussed economic topics and is often misunderstood by both workers and businessmen, said economist Mike Schussler, at the 14th UASA South African Employment Report at the Johannesburg Country Club.

"While South African minimum wages are not the highest in the world, they are likely to fall in the top third of minimum wages in purchase power parity terms and in the top half in nominal US dollar terms worldwide.”

"When comparing South African minimum wages across a range of sectors we generally fare better than any of our BRICS partners," Schussler said.

More workers are covered by minimum wages in South Africa than in most countries, and our sophisticated system has brought more worker and employee benefits than elsewhere.

In the popular tongue minimum wages normally refer to national or regional geographic areas, but in South Africa minimum wages are also often determined by sector or occupation.

"South Africa therefore does not have a single minimum wage, but quite a number as most formal sector workers are covered by either bargaining council minimum wages or by sectorial determinations as set by the minister of labour.”

“Worldwide 155 countries have determined minimum wages on a national or sector basis. At least 52% of these countries have not adjusted their minimum wages for at least two years. Another 41 countries do not have a determined national minimum wage, but like South Africa and Italy, have sectorial minimum wages," Schussler said.

Minimum wages range from $108 a year in Cuba to over $32,000 in Australia. Generally so-called Western countries have higher minimum wages than non-market economies.

To earn a minimum wage a worker usually would have to be employed in the formal economy and earn a regular wage. The fact is that a simple average of all countries with minimum wages shows that only about 63% of all workers earn a regular wage. For 103 emerging markets the simple average of workers earning a regular income is a mere 46%.

Too often it is forgotten that 84.5% of South African workers earn a regular wage or salary. This is high in world terms and is even better than in some developed countries.

In South Africa almost the entire formal sector is covered by minimum wages, as are domestic workers and some parts of the so-called informal sector such as taxi drivers.

Most employed South Africans are therefore covered by a minimum wage typically structured by sectors as well as occupation.

Schussler said when compared to emerging market countries, South African minimum wages fall mainly in the upper ranges.

"On a purchase power parity basis even domestic workers get a minimum wage similar to that of China while gold miners earn a minimum wage that compares favourably with Poland, Turkey, Japan, Spain and even Israel.”

"Compared to richer countries like Australia and Germany South African minimum wages lag behind somewhat, but in the government and mining sectors we are not too far behind compared to, for instance, the United States.”

“When comparing minimum wages one must perhaps look at how those wages stack up as a ratio of Gross Domestic Product (GDP) per capita. When comparing South African minimum wages across a range of sectors we generally fare better than any of our BRICS partners," he said.

A South African miner earns more than twice the per capita GDP income share compared to miners in India or Brazil, while the minimum wage for government employees is six times the ratio of Russia’s minimum wage.

In South Africa a single national minimum wage will not make sense for many of our sectors and certainly poses extra risks and challenges.